from CAPM -a blog for CPSM wannabes

3-B-1 Risk and Compliance-developing plans

January 31, 2011

This section seems even more important in a post-recession,globally connected world. As the recession started unfolding did you have plans that were activated to deal with say suppliers running out of working capital? Look around today and with the Egypt problems have you got plans to deal with problems of oil flow down the Suez canal for your business? Sounded really far fetched just a few months ago but that is the point this section urges supply management leaders to think about.

This section asks you to think about internal stake holders,external stake holders and first responders. It also covers tiers in the supply chain in that just because you have a water tight contract with your prime contractor - you cannot be oblivious to the second and third tier contractor in perhaps a third country.In other words,you need to know how your goods and services are being organized by your prime contractor and spell out what needs to be done in case of some risk situations that might escalate. Here are some examples of risk in the supply chain.

Reducing supply risk or risk mitigation can be simple things like having more than a few suppliers in different global locations that are capable of ramping up when there is a problem (labor unrest,natural disasters,political turmoil,electricity failure etc.) in one location. The important thing is to periodically evaluate risk,make explicit written plans and contingencies. You might feel that you can't predict everything but if you work out different scenarios your organization's thinking would have developed ahead of time and your organization would be better prepared to deal with risk as it escalates.